Note: We are CPA / EMBA tutors and not tax consultants or advisers. Please consult a professional for tax advice.
MBA students have always wondered if their MBA tuition is tax deductible. What about your MBA tutoring costs? The deductibility of MBA tuition and MBA tutoring costs has not been clear. But a recent ruling may provide some clarity. This article by Laura Saunders from yahoo!/wsj.com discusses how Ms Singleton-Clarke, a Maryland nurse, won a battle with the Internal Revenue Service on the deductibility of her MBA tuition! We applaud her for her bravery in taking on the IRS and that too without a lawyer!!
Generally you can deduct “ordinary and necessary” expenses paid in connection with your trade or business as long as it is appropriate or helpful to the business. Taxpayers can deduct education costs, in particular, as “ordinary and necessary” expenses if the education maintains or improves the skills required for the taxpayer’s current trade or business. These rules usually meant that if you are not a lawyer or a doctor and you go to law or medical school, you can’t deduct the cost of your tuition. The IRS argued that business school education and MBA tuition were not “ordinary and necessary” expenses of a business. Doctors and lawyers needed the certification to practice – but you did not need an MBA to be in business or have a career!
However, this ruling essentially states that your MBA / EMBA tuition can qualify as a deduction if you can prove that your MBA and the courses you take improve your business skills and help you grow your career/business. It does not matter if you are a full time MBA student or part time MBA student.
This tax filing season, make sure your tax advisor knows about this ruling and ask if you can qualify to deduct your MBA tuition cost. Check with him on your MBA / EMBA tutoring costs too! Maybe you’ll have more money in your pocket!
Note: We are CPA / MBA / EMBA tutors and not tax consultants or advisers. Please consult a professional before you decide on the above.